Cryptocurrency - halal or haram?

From the point of view of Shariah, Bitcoin transactions carry elements of gharar (transaction uncertainty) and maysir (high degree of risk inherent in gambling). In Islamic law there is also a concept that only the State prints money, and in the case of mining, this concept does not work. Currently, no Shariah standard has been developed for cryptocurrencies, since there are also no compelling arguments to ban them as haram.

Sharia law requires that currency be tangible or its existence verified. Islam prohibits the use of money associated with debt and prohibits the accrual and profiting from interest paid on loans. In order for a currency to be halal, it must be deflationary in nature, that is, resistant to inflation and its market price is stable.

Is Bitcoin a currency in Islam - most likely not. 

Historically, Islam recognizes only certain items as valuable, such as gold (dinar), silver (dirham); rice, dates, wheat, barley and salt. That is, one of the main characteristics of money from the point of view of Sharia is that it must represent a real asset.

That is why a halal currency was created in Tatarstan - Bitcoin ("it" in Tatar means "meat"), and the creators promise to provide this currency with the meat of breeding bulls. One Bitcoin is equal in price to ten kilograms of halal beef. That is, this cryptocurrency meets the requirements of Sharia in terms of providing money with a natural equivalent. And the increase in the value of capital is directly tied to the increase in live weight of the bull.

The second characteristic of money from the point of view of Sharia is its rarity. Here the justification is logic itself. That is, something that is ubiquitous and easy to obtain or produce cannot act as money, since it is not rare, and therefore its value is limited. But on the other hand, just as people previously mined gold and silver, today they “mine” bitcoins. Their number is limited [by the system] and every day the costs of production are becoming higher. Therefore, this characteristic corresponds to Sharia norms.

The third, most important element of the recognition of money is the position of the state. It is the state that recognizes this or that asset as monetary funds, or seizes or prohibits this or that currency in circulation. The state protects the currency from falling and, whenever possible, ensures the stability of the exchange rate through operations on the foreign market.

With regard to cryptocurrency, the issue of state recognition is ambiguous.. Is there a guarantee that tomorrow Bitcoins or any other cryptocurrency will not be banned on the territory of a particular state?

No one can give such guarantees and, moreover, cryptocurrencies cannot be regulated by the state and any state financial institutions.

Muslims who are interested in investing in Bitcoin must first be aware of the risks and disadvantages of the currency. This will also satisfy the concept of gharar, a concept in Islamic finance that is defined as "unknown, uncertain". Such a transaction is generally prohibited in Islam. But if a person enters into a transaction being aware and informed, then gharar will be allowed.

Buying and selling virtual currencies is currently incompatible with the Muslim religion due to the fact that they are not protected from speculation. They can be easily used in illegal activities such as money laundering, and they are not under the control of the country's surveillance.

That is why in Turkey, cryptocurrency has been recognized as non-Islamic.

Transactions with Bitcoins and other cryptocurrencies are inappropriate from an Islamic point of view. This was stated by the Turkish Directorate of Religious Affairs. “Buying and selling cryptocurrencies is religiously inappropriate due to the fact that these transactions are open to speculation and can easily be used for illegal purposes such as money laundering. Cryptocurrencies are also far from state audit and supervision,” RBC quotes the department’s message with reference to Hurriyet.

But there is another point of view. It is adhered to, for example, by the founder of the Blossom Finance system in Indonesia, Muslim Matthew Martin. He believes that as a payment system, Bitcoin is halal (permissible). In fact, Bitcoin goes beyond what the banking system offers, in which there is no guarantee that the originator owns the assets. Bitcoin guarantees with mathematical precision that the initiator of the transaction owns the underlying assets. “Regular banks operate using a fractional reserve system, which is prohibited in Islam,” notes the founder of the fintech platform. Thus, Matthew believes that, in comparison with ordinary fiat money, Bitcoin is more halal, justifying this by the fact that ordinary currency is based on usury, which is prohibited by Sharia law..

Thus, among the main arguments against bitcoins are a high degree of risk (maysir) and uncertainty (gharar), lack of backing with real assets and state guarantees.

At the same time, there are no fatwas or conclusions of scientists that clearly speak about the prohibition of bitcoins, and following the principle of fiqh al-muamalat “everything that is not prohibited is permitted,” that is, the principle of the predominance of permissibility, to carry out transactions with bitcoins is not prohibited by Muslims, but it is necessary to take into account all the associated risks and the high likelihood of the presence of elements of gharar and maysir. Moreover, not long ago the UAE began to issue a new cryptocurrency backed by gold. As with any new topic in the field of finance, it takes time to develop a unified approach among Islamic scholars to this issue. Perhaps the further development of the cryptocurrency market will bring changes to this topic. 

According to http://islam.kz